A factor (2-isocapryloyl-3R-hydroxymethyl-γ-butyrolactone) is a representative of the γ-butyrolactone autoregulators that trigger secondary metabolism and morphogenesis in the Gram-positive, filamentous bacterial genus STREPTOMYCES: Here, we report the A factor biosynthesis pathway in Streptomyces griseus. The monomeric AfsA, containing a tandem repeat domain of [almost equal to]80 aa, catalyzed β-ketoacyl transfer from 8-methyl-3-oxononanoyl-acyl carrier protein to the hydroxyl group of dihydroxyacetone phosphate (DHAP), thus producing an 8-methyl-3-oxononanoyl-DHAP ester. The fatty acid ester was nonenzymatically converted to a butenolide phosphate by intramolecular aldol condensation. The butenolide phosphate was then reduced by BprA that was encoded just downstream of afsA. The phosphate group on the resultant butanolide was finally removed by a phosphatase, resulting in formation of A factor. The 8-methyl-3-oxononanoyl-DHAP ester produced by the action of AfsA was also converted to A factor in an alternative way; the phosphate group on the ester was first removed by a phosphatase and the dephosphorylated ester was converted nonenzymatically to a butenolide, which was then reduced by a reductase different from BprA, resulting in A factor. Because introduction of afsA alone into Escherichia coli caused the host to produce a substance having A factor activity, the reductase(s) and phosphatase(s) were not specific to the A factor biosynthesis but commonly present in bacteria. AfsA is thus the key enzyme for the biosynthesis of γ-butyrolactones.